8.6 Reputation

Reputation is “a global evaluation of an organization accumulated over a period of time.” (quote by (J. Aaker, Vohs, and Mogilner 2010, 225)), original by (Fombrun and Shanley 1990).

Reputation can have both competence dimension (devine and Halpern 2001) and warmth (J. Aaker, Fournier, and Brasel 2004)

What is the difference between brand equity and brand reputation?

  • Brand equity: belongs to the marketing world, where it means the positive (good) part of the firm.

  • Brand reputation: belongs to the management world, where it means both the positive and negative parts of the firm.

(Proserpio and Zervas 2017) Effect of management responses on consumer reviews

  • Hotels respond after a negative shock to their ratings

  • hotels respond about the same rate to positive, negative, and neutral reviews

  • Responding hotels receive 0.12 stars higher in their ratings

  • When hotels begin to respond, they receive fewer but longer negative reviews because dissatisfied customers are less likely to post short, unjustifiable comments when they anticipate being scrutinized. Therefore, managers must consider a trade-off: fewer bad evaluations at the expense of lengthier and more thorough negative feedback.

  • Data: TripAdvisor hotel ratings.

  • Identification strategy (good paper to follow for endogenous treatment)s:

    • Since hotels can choose to respond to reviews and how to respond (non-random treatment).

References

Aaker, Jennifer, Susan Fournier, and S. Adam Brasel. 2004. “When Good Brands Do Bad.” Journal of Consumer Research 31 (1): 1–16. https://doi.org/10.1086/383419.
Aaker, Jennifer, Kathleen D. Vohs, and Cassie Mogilner. 2010. “Nonprofits Are Seen as Warm and For-Profits as Competent: Firm Stereotypes Matter.” Journal of Consumer Research 37 (2): 224–37. https://doi.org/10.1086/651566.
devine, I, and P Halpern. 2001. “Implicit Claims: The Role of Corporate Reputation in Value Creation.” Corporate Reputation Review 4 (1): 42–49. https://doi.org/10.1057/palgrave.crr.1540131.
Fombrun, Charles, and Mark Shanley. 1990. “What’s in a Name? Reputation Building and Corporate Strategy.” Academy of Management Journal 33 (2): 233–58. https://doi.org/10.5465/256324.
Proserpio, Davide, and Georgios Zervas. 2017. “Online Reputation Management: Estimating the Impact of Management Responses on Consumer Reviews.” Marketing Science 36 (5): 645–65. https://doi.org/10.1287/mksc.2017.1043.